Passenger flights between the U.S. and China will more than double by 2012 under an agreement reached Wednesday, setting the stage for fierce competition among carriers for these valuable trans-Pacific routes.
U.S. Transportation Secretary Mary E. Peters said the bilateral aviation agreement could stimulate $5 billion in revenue for U.S. airlines over the next several years. As part of the deal, American air cargo companies will gain virtually unlimited access to China.
“We’ve achieved a breakthrough agreement that opens the way for more frequent, more affordable and convenient air service between China and the United States,” Peters said on a conference call with reporters.
The accord was announced during high-level talks between the U.S. and China, led by Treasury Secretary Henry Paulson and China’s Vice Premier Wu Yi.
Under the pact, U.S. carriers will be able to operate 23 daily roundtrip flights by 2012, up from 10 currently. The agreement also allows the U.S. to designate three additional airlines to fly to China — at least one of them designated for cargo, transportation officials said.
China will have the right to fly the same number of flights to the United States, Peters said, and can designate an unlimited number of airlines to operate those flights.
The deal also lifts limits on the number of cargo flights and cargo carriers serving the two countries by 2011. Peters said the two countries agreed to begin talks in 2010 on a so-called “open skies” agreement
Competition among U.S. airlines for the flights, which one analyst estimated could be worth up to $200 million in annual revenue, will be intense. Peters said the competition for previous routes “makes some Olympic events look tame by comparison.”
Under the agreement, the United States can grant a new airline the right to fly to China and approve a new route this year.
Peters said the department wants to award the new designations as soon as possible, but did not give any additional information on timing. The new route can be from any U.S. international airport to Beijing, Shanghai, or Guangzhou.
The routes are awarded based on where the department believes new capacity is needed, as well as other factors, a department official said.
U.S. airlines did not waste any time in publicly pressing their bids.
Delta Air Lines Inc. chief operating officer Jim Whitehurst said in a written statement that the company is already seeking approval for a new route from Atlanta to Shanghai.
The flight “would fill a critical void in air travel today by linking the 55 million people of the southeastern United States directly to one of the world’s fastest growing economies,” Delta said.
Northwest Airlines, meanwhile, said the accord would allow new routes from its hubs in Detroit and Minneapolis that “Northwest urgently wants to offer its customers.” The airline called on the Transportation Department to establish proceedings to award the new routes that will become available through 2009, as demand will “again outstrip supply.”
UAL Corp.’s United Airlines won a new slot in January, which it used for flights between Washington, D.C. and Beijing.
American Airlines, which bid unsuccessfully for a Dallas-Beijing, has said it plans to bid in the future for new flights to China.
On the cargo side, FedEx Corp. said last month that a more open aviation regime would lead to lower shipping costs.
The department can award another new flight in 2008, four new flights in 2009, three in 2010 and two each in 2011 and 2012. The United States can also designate two new airlines to fly to China in 2009, one passenger and one cargo, Peters said.